Smart Money is Buying!

The "Snooty" Smart Less Dumb Money Indicator is Pointing to a Higher Stock Market.

Leave it to Wall Street to develop such a pretentious barometer – the Smart Money Flow Index.

The Smart Money Flow Index published by WallStreetCourier.com is calculated according to a proprietary formula by monitoring the action of the Dow Jones Industrial Average during two distinct time periods: shortly after the opening and during the last hour of trading each day. The theory is that the first several minutes of each trading day is primarily driven by “dumb money”. Early-day trades are mostly dominated by emotional buying -- greed and fear -- of the naïve crowd based on recent good or bad news. Early trading is also commonly comprised by a lot of buying on market orders and short covering at the opening.

By contrast, “smart money” waits until near the end of the day to trade and they very often test the market before by shorting heavily just to see how the market reacts. Then they move in a big way. These heavy hitters also have the best possible information available to them and are consequently believed to have the edge on all the other market participants. That is, the smart money flow index may best be described as the “Snooty Index”.